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TMI Blog2019 (4) TMI 759X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with. We are therefore of the view that there is no merit in ground raised by the revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of the relevant DTAA. Once an individual is regarded as Resident in India, his worldwide income becomes taxable in India. However, it is quite likely that the individual leaving India may also be a resident of the country from which he came to India under the local laws of such country in this case USA. Hence, for the relevant year(s), the individual would become a resident of both India and the other country. Thus, the individual may become a "dual resident", i.e. resident of two countries for tax purposes. On becoming a dual resident, the question arises as to which country has the right to tax his income. India has entered into a DTAA with USA. In such a situation, the revenue authorities of both countries would have claim over the individual's worldwide income for the purpose of levying tax. This would clearly lead to a case of double taxation. The Article-4 of the DTAA between India and USA provides for a "tieITA No.1655/Bang/2017 Page 4 of 13 breaker" provision under which such determination can be made is as follows:- "ARTICLE 4 - Residence - 1. For the purposes of this Convention, the term resident of a Contracting State means any person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be deemed to be a resident of the Contracting State in which he has an habitual abode ; (c) if he has an habitual abode in both Contracting States or in neither of them, he shall be deemed to be a resident of the Contracting State of which he is a national ; (d) if he is a national of both Contracting States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement. 8. The tiebreaker rule specified under Article 4 of the Double Taxation Avoidance Agreement (treaty) between India and USA was applied in sequence for determining the Assessee's residency. Residential status of the assessee for the period from April 01, 2012 to August 10, 2012 - the tie-breaker rule of the treaty between India and US 9. The assessee had a house property in India as well as in the US during the previous year 2012-13 (i.e. from April 01, 2012 to March 31, 2013). The assessee's house property in the USA was let out during the period of his Indian assignment (i.e. from April 01 2012 to August 10, 2012) and therefore for the purpose of the tie-breaker, deemed to be 'unavailable for use' to the assessee during this period, and accordingly, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment to India. The assessee has spent an aggregate of 30 years in the US. 2. Settlement - Post completion of his India assignment, the assessee has been living in the US with his spouse and children, where he plans to settle down for the rest of his lifespan. Residential status of the appellant for the period from August 11, 2012 to March 31, 2013 11. The assessee completed his assignment to India and moved back to the US on August 11 2012, where he resided at his US home and he also had a rented home available in India. Therefore, during this period of the previous year 2012-13 (i.e. from August 11 2012 to March 31 2013), he had a permanent home available both in India as well as in the US. Hence there is a tie. 12. Given that the first test was a tie, the second tie-breaker test for 'Centre of vital interests' had to be looked into. On the basis of this test, the assessee tie-broke his residency to the US as it was determined that the assessee's social and economic interests were closer to US. 13. Detailed below are specific points pertaining to the second tiebreaker test for 'Centre of Vital Interests' which substantiates that the assessee would tie-break his residency to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with a place (in this case a state). It cannot be broken so casually into bit and pieces by claiming that today one has economic and personal relationship with state A and after few days with state B. The concept of economic and personal relationship is a qualitative one which has to be analyzed in a holistic manner rather than being compartmentalized. Thus the claim of the assessee that during the period of 11 august 2012 to 31 march 2013, the personal and economic relations are closer (centre of vital interests) to US negates all logic. It has to be noted that during the entire period of AY 2012-13 (i.e immediately preceding the AY in discussion) the assessee was working for Accenture Services Pvt Ltd, India and was present in India. Thus by moving into US for an assignment from 11 august 2012 to 31 march 2013, the assessee cannot claim that his economic and personal relationship are suddenly closer to US than India. Rather by all logic the assessee economic and personal relationship is closer to India than to US for any given time. 4.8. Hence by applying the second criteria of article 4(2) of the Indo-US DTAA it can be clearly ascertained that the state with which his person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A is not applicable as the assessee is treated as Resident and Ordinarily Resident in India for tax purposes." 18. On the basis of the above discussion, the AO brought to tax a sum of ₹ 2,45,84,003 as income which escaped assessment 19. Aggrieved by the aforesaid additions made by the AO, the assessee filed appeal before the CIT(Appeals) and reiterated the submissions as were made before the AO on the non-taxability of income received for the period 11.08.2012 to March, 2013. Before the CIT(A), the assessee had filed the Tax Residency Certificate for the years 2012 & 2013 obtained from the US authorities. The CIT(Appeals), on a consideration of the entire material on Assessee's centre of vital interest with US (these details are set out in the earlier paragraphs of this order and hence not repeated) came to the conclusion that by applying the second tie breaker for the period of August, 2012 to March, 2013 the Assessee's centre of vital interest was closure to US and that the Assessee succeeded in establishing that he is a Resident of US under the DTAA for the period August, 2012 to March, 2013. Therefore, the treaty exemption is available to the Assessee and therefore the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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